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G.R.No.101949|TheHolySeev.Rosario,Jr.
ENBANC
[G.R.No.101949.December1,1994.]
THEHOLYSEE,petitioner,vs.THEHON.ERIBERTOU.ROSARIO,JR.,
asPresidingJudgeoftheRegionalTrialCourtofMakati,Branch61
andSTARBRIGHTSALESENTERPRISES,INC.,respondents.
DECISION
QUIASON,J :
p
ThisisapetitionforcertiorariunderRule65oftheRevisedRulesofCourtto
reverseandsetasidetheOrdersdatedJune20,1991andSeptember19,1991of
theRegionalTrialCourt,Branch61,Makati,MetroManilainCivilCaseNo.90183.
TheOrderdatedJune20,1991deniedthemotionofpetitionertodismissthe
complaint in Civil Case No. 90 183, while the Order dated September 19, 1991
deniedthemotionforreconsiderationoftheJune20,1991Order.
PetitioneristheHolySeewhoexercisessovereigntyovertheVaticanCityin
Rome,Italy,andisrepresentedinthePhilippinesbythePapalNuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic
corporationengagedintherealestatebusiness.
LLphil
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TrialCourt,Branch61,Makati,MetroManilaforannulmentofthesaleofthethree
parcels of land, and specific performance and damages against petitioner,
represented by the Papal Nuncio, and three other defendants: namely, Msgr.
DomingoA.Cirilos,Jr.,thePRCandTropicana(CivilCaseNo.90183).
Thecomplaintallegedthat:(1)onApril17,1988,Msgr.Cirilos,Jr.,onbehalf
ofpetitionerandthePRC,agreedtoselltoRamonLicupLots5A,5Band5Dat
thepriceofP1,240.00persquaremeters(2)theagreementtosellwasmadeonthe
conditionthatearnestmoneyofP100,000.00bepaidbyLicuptothesellers,andthat
the sellers clear the said lots of squatters who were then occupying the same (3)
LicuppaidtheearnestmoneytoMsgr.Cirilos(4)inthesamemonth,Licupassigned
hisrightsoverthepropertytoprivaterespondentandinformedthesellersofthesaid
assignment(5)thereafter,privaterespondentdemandedfromMsgr.Cirilosthatthe
sellers fulfill their undertaking and clear the property of squatters however, Msgr.
Cirilos informed private respondent of the squatters' refusal to vacate the lots,
proposing instead either that private respondent undertake the eviction or that the
earnestmoneybereturnedtothelatter(6)privaterespondentcounterproposedthat
if it would undertake the eviction of the squatters, the purchase price of the lots
shouldbereducedfromP1,240.00toP1,150.00persquaremeter(7)Msgr.Cirilos
returned the earnest money of P100,000.00 and wrote private respondent giving it
seven days from receipt of the letter to pay the original purchase price in cash (8)
privaterespondentsenttheearnestmoneybacktothesellers,butlaterdiscovered
thatonMarch30,1989,petitionerandthePRC,withoutnoticetoprivaterespondent,
soldthelotstoTropicana,asevidencedbytwoseparateDeedsofSale,oneoverLot
5A, and another over Lots 5B and 5D and that the sellers' transfer certificate of
title over the lots were cancelled, transferred and registered in the name of
Tropicana(9)TropicanainducedpetitionerandthePRCtosellthelotstoitandthus
enriched itself at the expense of private respondent (10) private respondent
demandedtherescissionofthesaletoTropicanaandthereconveyanceofthelots,
tonoavailand(11)privaterespondentiswillingandabletocomplywiththeterms
of the contract to sell and has actually made plans to develop the lots into a
townhouse project, but in view of the sellers' breach, it lost profits of not less than
P30,000.000.00.
LLjur
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale
between petitioner and the PRC on the one hand, and Tropicana on the other (2)
thereconveyanceofthelotsinquestion(3)specificperformanceoftheagreement
tosellbetweenitandtheownersofthelotsand(4)damages.
OnJune8,1990,petitionerandMsgr.Cirilosseparatelymovedtodismissthe
complaintpetitionerforlackofjurisdictionbasedonsovereignimmunityfromsuit,
andMsgr.Cirilosforbeinganimproperparty.Anoppositiontothemotionwasfiled
byprivaterespondent.
On June 20, 1991, the trial court issued an order denying, among others,
petitioner's motion to dismiss after finding that petitioner "shed off [its] sovereign
immunitybyenteringintothebusinesscontractinquestion"(Rollo,pp.2021).
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immunity.IftheSecretaryofStatefindsthatthedefendantisimmunefromsuit,he,
in turn, asks the Attorney General to submit to the court a "suggestion" that the
defendant is entitled to immunity. In England, a similar procedure is followed, only
the Foreign Office issues a certification to that effect instead of submitting a
"suggestion"(O'Connell,IInternationalLaw130[1965]Note:ImmunityfromSuitof
Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088
[1941]).
In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of its claim of
sovereignordiplomaticimmunity.ButhowthePhilippineForeignOfficeconveysits
endorsementtothecourtsvaries.InInternationalCatholicMigrationCommissionv.
Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter
directly to the Secretary of Labor and Employment, informing the latter that the
respondentemployer could not be sued because it enjoyed diplomatic immunity.
InWorld Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of
Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57
SCRA1(1974),theU.S.EmbassyaskedtheSecretaryofForeignAffairstorequest
the Solicitor General to make, in behalf of the Commander of the United States
Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The
Solicitor General embodied the "suggestion" in a Manifestation and Memorandum
asamicuscuriae.
LLphil
Inthecaseatbench,theDepartmentofForeignAffairs,throughtheOfficeof
Legal Affairs moved with this Court to be allowed to intervene on the side of
petitioner.TheCourtallowedthesaidDepartmenttofileitsmemoranduminsupport
ofpetitioner'sclaimofsovereignimmunity.
Insomecases,thedefenseofsovereignimmunitywassubmitteddirectlyto
the local courts by the respondents through their private counsels (Raquiza v.
Bradford, 75 Phil. 50 [1945] Miquiabas v. PhilippineRyukyus Command, 80 Phil.
262 [1948] United States of America v. Guinto, 182 SCRA 644 [1990] and
companioncases).IncaseswheretheforeignstatesbypasstheForeignOffice,the
courtscaninquireintothefactsandmaketheirowndeterminationastothenatureof
theactsandtransactionsinvolved.
III
Theburdenofthepetitionisthatrespondenttrialcourthasnojurisdictionover
petitioner, being a foreign state enjoying sovereign immunity. On the other hand,
privaterespondentinsiststhatthedoctrineofnonsuabilityisnotanymoreabsolute
and that petitioner has divested itself of such a cloak when, of its own free will, it
enteredintoacommercialtransactionforthesaleofaparceloflandlocatedinthe
Philippines.
A.
TheHolySee
Beforewedeterminetheissueofpetitioner'snonsuability,abrieflookintoits
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statusasasovereignstateisinorder.
BeforetheannexationofthePapalStatesbyItalyin1870,thePopewasthe
monarch and he, as the Holy See, was considered a subject of International Law.
WiththelossofthePapalStatesandthelimitationoftheterritoryundertheHolySee
toanareaof108.7acres,thepositionoftheHolySeeinInternationalLawbecame
controversial(SalongaandYap,PublicInternationalLaw3637[1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy
recognized the exclusive dominion and sovereign jurisdiction of the Holy See over
the Vatican City. It also recognized the right of the Holy See to receive foreign
diplomats, to send its own diplomats to foreign countries, and to enter into treaties
according to International Law (Garcia, Questions and Problems In International
Law,PublicandPrivate81[1948]).
The Lateran Treaty established the statehood of the Vatican City "for the
purpose of assuring to the Holy See absolute and visible independence and of
guaranteeingtoitindisputablesovereigntyalsointhefieldofinternationalrelations"
(O'Connell,IInternationalLaw311[1965]).
llcd
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haddiplomaticrepresentationswiththePhilippinegovernmentsince1957(Rollo,p.
87).Thisappearstobetheuniversalpracticeininternationalrelations.
B.
SovereignImmunity
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Ontheotherhand,thisCourthasconsideredthefollowingtransactionsbya
foreignstatewithprivatepartiesasactsjuregestionis:(1)thehiringofacookinthe
recreationcenter,consistingofthreerestaurants,acafeteria,abakery,astore,and
a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to
American servicemen and the general public (United States of America v. Rodrigo,
182SCRA644[1990])and(2)thebiddingfortheoperationofbarbershopsinClark
AirBaseinAngelesCity(UnitedStatesofAmericav.Guinto,182SCRA644[1990]).
The operation of the restaurants and other facilities open to the general public is
undoubtedlyforprofitasacommercialandnotagovernmentalactivity.Byentering
into the employment contract with the cook in the discharge of its proprietary
function, the United States government impliedly divested itself of its sovereign
immunityfromsuit.
Intheabsenceoflegislationdefiningwhatactivitiesandtransactionsshallbe
considered"commercial"andasconstitutingactsjuregestionis,wehavetocomeout
withourownguidelines,tentativetheymaybe.
Certainly, the mere entering into a contract by a foreign state with a private
partycannotbetheultimatetest.Suchanactcanonlybethestartoftheinquiry.The
logicalquestioniswhethertheforeignstateisengagedintheactivityintheregular
course of business. If the foreign state is not engaged regularly in a business or
trade,theparticularactortransactionmustthenbetestedbyitsnature.Iftheactis
inpursuitofasovereignactivity,oranincidentthereof,thenitisanactjure imperii,
especiallywhenitisnotundertakenforgainorprofit.
LLjur
AsheldinUnitedStatesofAmericav.Guinto,(supra):
"ThereisnoquestionthattheUnitedStatesofAmerica,likeanyotherstate,will
bedeemedtohaveimpliedlywaiveditsnonsuabilityifithasenteredintoa
contractinitsproprietaryorprivatecapacity.Itisonlywhenthecontract
involvesitssovereignorgovernmentalcapacitythatnosuchwaivermaybe
implied."
In the case at bench, if petitioner has bought and sold lands in the ordinary
course of a real estate business, surely the said transaction can be categorized as
an act jure gestionis. However, petitioner has denied that the acquisition and
subsequentdisposalofLot5Aweremadeforprofitbutclaimedthatitacquiredsaid
property for the site of its mission or the Apostolic Nunciature in the Philippines.
Privaterespondentfailedtodisputesaidclaim.
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Thedecisiontotransferthepropertyandthesubsequentdisposalthereofare
likewise clothed with a governmental character. Petitioner did not sell Lot 5A for
profitorgain.Itmerelywantedtodisposeoffthesamebecausethesquattersliving
thereon made it almost impossible for petitioner to use it for the purpose of the
donation.Thefactthatsquattershaveoccupiedandarestilloccupyingthelot,and
that they stubbornly refuse to leave the premises, has been admitted by private
respondentinitscomplaint(Rollo,pp.26,27).
The issue of petitioner's nonsuability can be determined by the trial court
withoutgoingtotrialinthelightofthepleadings,particularlytheadmissionofprivate
respondent.Besides,theprivilegeofsovereignimmunityinthiscasewassufficiently
established by the Memorandum and Certification of the Department of Foreign
Affairs. As the department tasked with the conduct of the Philippines' foreign
relations(Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of
Foreign Affairs has formally intervened in this case and officially certified that the
EmbassyoftheHolySeeisadulyaccrediteddiplomaticmissiontotheRepublicof
thePhilippinesexemptfromlocaljurisdictionandentitledtoalltherights,privileges
and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156
157). The determination of the executive arm of government that a state or
instrumentality is entitled to sovereign or diplomatic immunity is a political question
that is conclusive upon the courts (International Catholic Migration Commission v.
Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and
affirmedbytheexecutivebranch,itisthedutyofthecourtstoacceptthisclaimsoas
not to embarrass the executive arm of the government in conducting the country's
foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As
inInternationalCatholicMigrationCommissionandinWorldHealthOrganization,we
abidebythecertificationoftheDepartmentofForeignAffairs.
cdll
Ordinarily, the procedure would be to remand the case and order the trial
courttoconductahearingtoestablishthefactsallegedbypetitionerinitsmotion.In
view of said certification, such procedure would however be pointless and unduly
circuitous(Ortigas&Co.Ltd.Partnershipv.JudgeTirsoVelasco,G.R.No.109645,
July25,1994).
IV
Private respondent is not left without any legal remedy for the redress of its
grievances. Under both Public International Law and Transnational Law, a person
whofeelsaggrievedbytheactsofaforeignsovereigncanaskhisowngovernment
toespousehiscausethroughdiplomaticchannels.
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Private respondent can ask the Philippine government, through the Foreign
Office, to espouse its claims against the Holy See. Its first task is to persuade the
Philippine government to take up with the Holy See the validity of its claims. Of
course, the Foreign Office shall first make a determination of the impact of its
espousal on the relations between the Philippine government and the Holy See
(Young,Remedies of Private Claimants Against Foreign States, Selected Readings
on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the
Philippinegovernmentdecidestoespousetheclaim,thelatterceasestobeaprivate
cause.
cdphil
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